No 3% Coupon For You: 10Y Treasury Prices Just Shy Of Critical Level Amid Jump In Foreign Buyers

Bond traders and analysts were closely following today’s 10 Year Treasury auction, in a day in which the yield on the 10Y had hugged the 3.000% for much of the day, for one simple reason: they wanted to know if this would be the first auction since early 2011 to have a 3.00% cash coupon. For that to happen, the auction stop would have to print modestly above 3% and heading into the auction that seemed possible, with the yield rising as high as 3.01%.

However, it was not meant to be, because despite trading north of 3.00% in the secondary market, both the When Issued and the auction stop level ended up being just fractionally below the key level: the 10Y priced at a high yield of 2.995%, tailing fractionally to the 2.994% When Issued, although both were better than the prevailing market rate. But the immediate implication is that the cash coupon, i.e., rate on the auction would not be 3.00%, but one step below it, or 2.875%. So one more month without the long awaited 3.00% coupon.

Putting the auction in context, the high yield of 2.995% was the highest since 3.009% in January 2014, and was 20bps above the 2.795% in the April auction.

The internals were less exciting, if stronger than last month, with the bid to cover rising from 2.46 to 2.56, above the 6 month average of 2.47.

Indirects ended up taking down 63% of the allotment, above last month’s 53.2%, and just shy of the 63.92 6-auction average. And with Directs taking down 8.3%, just shy of 8.4% last month and higher than the 7.4% average, this meant Dealers were left with 28.7%, right on top of the average.

Overall, a strong auction, and certainly stronger than where it had been trading in the secondary market, where it appears someone was almost incented to have the first 3%+ stop since Jan 2014.


READ No 3% Coupon For You: 10Y Treasury Prices Just Shy Of Critical Level Amid Jump In Foreign Buyers On ZH

Author: HEDGE

Hedge Accordingly was founded ahead of the global financial crisis in January of 2008, with the goal of providing our readers our unique take on The Latest News on Wall Street, Stocks, #Politics and Business news. Hedge Accordingly produces both original, and aggregated #Wallst news content from top publishers around the world. We curate aggregated content covering the latest news on politics, stocks, wall street, and the tech industry. We also provide free stock charting, quotes and a bitcoin, forex and currency exchange. Learn More About